Contrary to the expectations of Nigerians that they would soon have improved electricity supply of 6,000 megawatts in the country, which was the target for 2016 set by the federal government earlier in the year, operators in the sector have confirmed that the country cannot achieve this target due to issues of gas shortage, debts and transmission challenges confronting the power companies.
LEADERSHIP learnt that electricity generation crashed to 3,050.20MW last weekend. An official of the Nigerian Electricity System Operator of Transmission Company of Nigeria (TCN) disclosed that electricity generation had been dwindling due to challenges of accessing gas by generation companies.
Also, the executive secretary, Association of Power Generation Companies, Joy Ogaji, said debts owed them, which stood at more than N400 billion, was one of the major reasons for the poor power supply in the country.
In an interview with LEADERSHIP recently, the managing director, Mainstream Energy Solutions Ltd, Engr Lamu Audu, the concessionaire of Kainji and Jebba Hydro Power Plants, said that, if put together, the available installed capacity of all the generating plants in Nigeria may reach the 6,000MW target, but the fact that some power plants cannot run due to lack of gas while some have the gas but cannot transmit into the grid because of transmission problems make it unlikely that they would achieve the 6,000MW target by the end of the year .
‘‘There are so many issues at getting that availability on the grid; it’s not just getting the generators in place,’’ he said.
Just last week, the power generation companies and distribution companies (GENCOs and DISCOs) said they recorded a shortfall of N809.8 billion as at November, due to the scarcity of foreign exchange.
Foreign exchange has been identified as a critical challenge to operators who are hamstrung in replacing ageing equipment. Operators have also blamed some of its woes on inconsistency and ineptitude on the part of the Nigeria Electricity Regulatory Commission (NERC), as they seek federal government’s intervention toward finding a lasting solution to the problem of shortfalls in the sector.
They said that selling gas for local consumption in local currency; providing security against Forex fluctuation; re-engineering the DISCos’ balance sheet and making it bankable and having an effective tariff mechanism, among others, are the options left to save the country from being plunged into total darkness.
Since the privatisation of the sector, the 11 DISCOs said they had been running at a loss of not less than N10/KW of energy arising from the numerous problems affecting the industry.
The operators insist that much needs to be done in terms of regulation and unfavourable policies, noting that the industry lost N12.8 billion to the one-month delay in the take-off of the current tariff regime, which became effective in February 2016 instead of January, after being conceived in December 2015.
For the DISCOs, the major cause of the crisis is the persistent increase in the exchange rate after the December 2015 rate of N197 to $1.
Also, the GENCOs are made to buy gas from the suppliers in US dollars, tender their invoices to the DISCOs to pay at the prevailing value of Forex and charge their tariffs based on the fixed exchange rate, thus leading to the shortfall.
By June 2015, the exchange rate had gone up to N293 to $1, and now to about N360 at the official rate, meaning that the Forex value had doubled such that the same quantum of energy bought from the GENCOs at N10.50 now goes for about N18, while the DISCOs cannot reflect this in the tariff for the end users to pay.
The operators further contend that if they should pay at the fixed rate of N197 to $1, they will still have a shortfall.
Experts said that though the privatised electricity firms may have been freed of the state bureaucracy that previously hampered their operations, these utilities still encounter myriad if structural problems that continue to hamper the growth of the power sector.
They identified some of these to include shortage of gas for thermal stations, high level of unpaid electricity bills and outdated and poorly maintained transmission network, which government still owns but put under private management since 2012.
Many of the new power operators have struggled to make progress, especially as they have had to contend with ageing facilities requiring substantial amounts of investments to upgrade and expand.
With a total installed capacity of 8,457.6 MW (81 percent of total) in early 2014, thermal plants (gas-fired plants) dominated the Nigerian power supply mix. The rest of the country’s capacity is in the form of hydropower plants.
On face value, thermal capacity alone is nearly double of Nigeria’s recorded peak generation (4600 MW in 2014). Pipelines, the veins of gas-powered generation, had been consistently vandalised.
The minister of power recently put the cost of the vandalised Escravos-Lagos pipeline per day across the entire power sector supply chain to N470 million.
Nigeria, known to be ninth most proven gas reserve entity in the world, is unable to provide gas needed for its thermal plants.
With this scenario, the quantity of electricity that can be generated at any point in time is not determined by installed capacity but, rather, by the total available capacity.
The available capacity is the percentage of the total capacity that is not prevented from working, through planned/unplanned outages and/or lack of required fuels. Experts, however, welcomed federal government’s decision to pay legacy debts totalling N213 billion in 2014 as part of the process of boosting gas supply to the power sector.
CEO of Eko DISCO, Mr. Oladele Amoda, while reacting to gas supply constraint in the sector, said the company currently receives only 200MW from the national grid instead of 1,300MW which, he said, is not enough to sustain supply stability across its network.
Amoda also disclosed that the company is spending N700 million to replace 138 transformers in order to boost supply within the festive period.
The non-availability of gas supply to the 10 plants under the National Independent Power Projects (NIPP) is said to be responsible for their failure to generate 4,541MW of power expected of them to feed the national grid.
However, an official with the Niger Delta Power Holding Company (NDPC) told LEADERSHIP that the country was close to achieving stable gas supply to the power stations. The official, who would not want to be named, said some of its plants had started receiving supply, though still not enough to boost power generation as envisaged by government.
Aside generation, the country is battling with issues around the technicalities of power transmission.
Transmission is the transportation of the power from the generation plants to the distribution companies, which then take it to the homes, offices, factories, etc., and this work is done by the Transmission Company of Nigeria (TCN) which was not privatised.
Today, it can only transport 5,000 MW.
The power minister, Babatunde Fashola, who revealed the low wheeling capability of the company, said about 907 containers of various equipment imported in the ports, and paid for, had been abandoned, having accumulated demurrage, port charges and all sorts of costs, by contractors who had deserted their contracts.
He, however, disclosed that approvals had been given by President Buhari for their release.
The containers, expectedly, contain all sorts of equipment which, when recovered, will hopefully help to solve some of the nation’s transmission problems.
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